INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

The following table presents the expense for income taxes in the consolidated statements of income which is comprised of the following (in thousands):

		2016			2015			2014
Current:	Federal	$	4,989		$	4,178		$	5,208
	State and local		515			694			223
			5,504			4,872			5,431
Deferred:	Federal		2,343			1,139			(885	)
	State and local		28			429			(747	)
			2,371			1,568			(1,632	)
Valuation allowance			(253	)		(554	)		(79	)
Total		$	7,622		$	5,886		$	3,720

Effective income tax rate reconciliation

The total tax expense was different from the amounts computed by applying the federal income tax rate because of the following:

	2016			2015			2014
Federal income tax expense at statutory rates		35	%		35	%		35	%
Surtax exemption		(1	)		(1	)		(1	)
Tax-exempt income		(8	)		(10	)		(14	)
State and local income taxes, net of federal benefit		2			2			1
Deferred tax asset adjustment and change in rate		-			(1	)		(2	)
Other		-			-			1
Total		28	%		25	%		20	%

Deferred tax assets and liabilities

The effects of temporary differences between tax and financial accounting that create significant deferred tax assets and liabilities and the recognition of income and expense for purposes of tax and financial reporting are presented below (in thousands):

	2016			2015			2014
Deferred tax assets:
Allowance for loan losses	$	8,244		$	8,392		$	7,576
Deferred compensation		1,560			1,624			1,652
Stock-based compensation		763			640			459
Realized losses on securities reclassed from available for sale to held to maturity		49			930			1,180
Unfunded pension obligation		3,277			2,529			2,496
Alternative minimum tax credit		-			2,427			3,925
Net operating loss carryforward		699			614			1,169
Other		1,170			1,104			992
Total deferred tax assets		15,762			18,260			19,449
Deferred tax liabilities:
Unrealized gains on securities available for sale		(71	)		(957	)		(1,724	)
Other		(608	)		(844	)		(842	)
Total deferred tax liabilities		(679	)		(1,801	)		(2,566	)
Valuation allowance		(699	)		(614	)		(1,169	)
Net deferred tax assets	$	14,384		$	15,845		$	15,714